What is it?
Bankruptcy is an option to consider if you’re insolvent – ie you have debts you cannot possibly repay. Although bankruptcy has a stigma attached to it, for some people it can be the best solution for resolving their problems. Once declared bankrupt you are protected by law from any further creditor action – for example, they are no longer allowed to contact you or add further interest charges.
What will happen?
Bankruptcy proceedings start with the making of a bankruptcy order by the court. It may be accompanied by an income payments order, meaning that if you can afford to do so, you will have to make payments to the court over a period of three years. During that time, you will be unable to save money, get credit or enjoy an expensive lifestyle.
You are usually bankrupt for 12 months, during which time you are subject to various restrictions: you cannot take out a mortgage, be a company director or take a position in the police force, military or various other professions.
Once your bankruptcy has finished you will be discharged, meaning you are no longer a bankrupt person. Any outstanding debt is written off by the court and you can continue with your life, debt free.
Being declared bankrupt has important consequences for your home. Your house may be at risk if there is equity in it (although it may not be physically repossessed for 12 months), and so will your car if it is worth more than £2,500. These assets will be seized by the court and shared between your creditors.
How White Maund can help
If you are in financial difficulties it can be a very stressful time, but taking professional advice really is the first step to recovery. We can take a look at your situation and help you work out if bankruptcy is right for you. There may even be alternatives you have not thought about. Call us now for a free consultation.
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